05 Jun 2023 : The Indian Express

Editorial 1 : The net zero challenge

Recent Context:

• Recently, The RBI’s Currency and Finance Report for 2022-23 — “Towards a greener cleaner India” report covers an expansive set of issues, and conveys the central bank’s future course of action.
• It is a timely update to its previous reports that had left many wondering what will be its response to climate change.

Role of Sustainable economy in countering climate change: (The report Highlights)

• India is committed to achieving net zero status by 2070 at CoP26. The road to net zero will not be smooth, as is reflected in the report.
• The RBI provides a much-desired framework of thinking about the trade-offs between growth, inflation and efforts to transition to a net zero economy.
• There is a tension between India’s ambition to achieve advanced economy status by 2047 and lowering its emissions.
• An annual GDP growth rate of 9.6 per cent would raise net GHG emissions by 10.5 times of levels in 2021-22.
• In order to achieve dual objectives of net zero by 2070 and advanced economy status, India  would have to increase the share of green energy in primary energy consumption to 82 per cent by 2070 and reduce emission intensity by 5.4 per cent annually.
• The report’s finding that nationally determined contribution will set back economic output by as much as 9 per cent by 2049 is a wake-up call.
• Only a more ambitious action of achieving net zero by 2050 would limit the losses from extreme weather events and decarbonisation to 3 per cent by 2049. The question for policy is how can India scale its ambition given the constraints set by investment costs.
• The report also weighs on the inflationary impact of the status quo against the alternative of achieving net zero by 2050.
  •  The latter will raise prices over the next three years but will subdue persistent inflationary effects over the long term. The empirics, therefore, make it clear that transitioning to net zero by 2050 may be a better option globally.
     

Report highlights the risk over the fossil fuel-based assets

• As the economy shift toward the renewable based energy, the productive life of existing fossil fuel-based assets will be shortened thus exposing the banking sector (through loans) to these assets.
• Such risks are more pronounced for public-sector banks. However, the financial risks are not just limited to conventional energy, non-conventional energy registered an increase in share of industry bad loans. With an annual estimated investment cost of 5-6 per cent of GDP, associated risks to the financial system
• At the same time, there are risks to assets, and therefore to the banking system, from the growing incidence of extreme weather events. RBI’s assessment is that a one-period climate shock can reduce output by 1 per cent up to five quarters. This in turn will reduce incomes and consumption.
   

Role of fiscal policy in addressing the climate risk:

• The report lays significant emphasis on the role of fiscal policy. It makes a case for fiscal intervention in the form of a carbon tax or an emission trading system.
• It finds that a carbon tax of $25 per tonne and $50 per tonne of Co2 under different scenarios can be effective, alongside other policy interventions.
• The importance of a carbon tax is indisputable, especially given the G7’s commitment to trade based tax measures. However, its distributional consequences are not addressed at all.
•  It remains unclear from the analysis the level of carbon tax most compatible with different growth outcomes. It is also unclear which tax redistribution mechanisms can mitigate the distributional consequences.

Conclusion:

• The report sets the tone for monetary policy in the coming years. But it also lays out policy questions that remain widely unaddressed the need for a taxonomy and sectoral pathways aligned with net zero.
• While it does mention the role of shifts in production to less energy intensive sectors — fisheries, textiles, land transport and services. There is no roadmap for these sectors that have long confronted legacy issues. As the RBI takes on the responsibility of managing risks, fiscal policy and regulatory measures are also needed to meet the challenges.

Editorial 2 : Adverse possession: What is it, what has the Law Commission said about it

Recent Context:

• Recently, The Law Commission, headed by former Chief Justice of Karnataka High Court Ritu Raj Awasthi said in its 280th report that There is no justification for introducing any change in the law relating to adverse possession,
• However, two of its ex officio members filed a dissent note stating that the law does not stand judicial scrutiny and “promotes false claims under the colour of adverse possession”
   

What is adverse possession?

• The concept of adverse possession stems from the idea that land must not be left vacant but instead, be put to judicious use.
• Essentially, adverse possession refers to the hostile possession of property, which must be “continuous, uninterrupted, and peaceful.”
• According to the Law Commission’s report, the rationale behind this comes from considerations that the “title to land should not long be in doubt”, society will benefit from someone making use of land the owner leaves idle,” and “persons who come to regard the occupant as owner may be protected.”
• The report said that the original title holder who neglected to enforce his rights over the land cannot be permitted to re-enter the land after a long passage of time.

What provisions did the Limitation Act, 1963 bring with it?

• The 1963 Act fortified the position of the true owner of the land, as he now had to merely prove his title, while the burden of proof of adverse possession shifted to the person claiming it.
• Under the Limitation Act, 1963, any person in possession of private land for over 12 years or government land for over 30 years can become the owner of that property, as laid down in Articles 64, 65, 111, or 112 of the 1963 Act, relating to suits for possession of immovable property.
• According to Article 65 of Schedule I of the 1963 Act, a person in adverse possession of immovable property acquires title to that property. However, the possession must be open, continuous, and “in defiance of the title of the real owner for twelve years.” Similarly, Article 64 governs suits for possession based on previous possession and not on title.
• Meanwhile, Article 112 of Indian constitution applies to government property which mandates a requirement of 30 years for granting a title by adverse position.
•  Further, Article 111 says that the limitation period for the State will be 30 years from the date of dispossession for land belonging to a private person where any public street or road or any part of it has been dispossessed and no suit has been moved for its possession “by or on behalf of any local authority

What are the main ingredients of adverse possession?

• In the 2004 Apex Court ruling in Karnataka Board of Wakf v Government of India, the court dealt with the ingredients of adverse possession.
• According to the observations made by former SC judge S. Rajendra Babu in the case, “A person who claims adverse possession should show:
  • on what date he came into possession
  • what was the nature of his possession
  • whether the factum of possession was known to the other party
  • how long his possession has continued, and
  • his possession was open and undisturbed.
• For the adverse possession to be “open,” or without any attempt at concealment, it doesn’t need to be brought to the specific knowledge of the owner. However, such a requirement may be insisted on where an ouster of title is pleaded
   

Why did the SC suggest changes to the law on adverse possession?

• A two-judge SC bench, in its 2008 ruling in Hemaji Waghaji Jat v. Bhikhabhai Khengarbhai Harijan and Others, while dealing with Article 65 of the Schedule of the Limitation Act, 1963, observed that the law of adverse possession “ousts an owner on the basis of inaction within limitation” and is “irrational, illogical, and wholly disproportionate”.
• “The law as it exists is extremely harsh for the true owner and a windfall for a dishonest person who has illegally taken possession of the property,” the court said. Adding that the law should not benefit the illegal action of a “rank trespasser” who had wrongfully taken possession of the true owner’s property, the court said that it also “places a premium on dishonesty”.
• Emphasising the “urgent need” for “a fresh look regarding the law on adverse possession”, the court recommended the government “to seriously consider and make suitable changes in the law of adverse possession”.
• Consequently, the 19th Law Commission prepared a “consultation paper-cum-questionnaire”. After receiving responses, the Commission concluded that the present provisions afforded sufficient protection to the land’s true owner and there was no need to amend the law. However, the Commission failed to file a final report on the subject.
   

What did the dissent note say?

• Asserting that courts have rarely ruled in favour of adverse possession owing to its contradictory requirement that the nature of possession is “peaceful as well as hostile”, the dissenting opinion said that the law should be struck off.
• Citing troubles that true owners have been subjected to, such as “avoidable and expensive litigation” by unscrupulous persons” who are acquainted with fraud, the note said that the already overburdened machinery of the courts is further saddled with avoidable work, much to the misery of the litigants.
• “lf the law of adverse possession is struck off from the Limitation Act it will not hinder anybody’s right nor will it cause any neglect of land resources,” the note reads.

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